Since the Saudi-led OPEC agreed to curtail production, I have been saying that it is an attempt to gulp their market share. Western media, mostly own by anti-Muslim groups, is still trying to persuade OPEC to further cut output to facilitate the US to attain the status of largest oil producing country.
Till recently, there was embargo on export of oil from the US as the country was oil deficient. Now the US has attained the club of oil exporting countries and its exports are on the rise. Shipment data also shows more oil being moved through the oceans than when cuts were put in place.
According to Reuters, oil prices tumbled more than 2 percent on this Friday, posting the biggest weekly decline in more than a month. The fall was prompted by rising US production and stockpiles. This completely frustrates attempts by OPEC to reduce the global crude glut.
During the week ended on Friday, Brent fell 7 percent, while WTI came down 6.7 percent. It was the largest percentage drop for both benchmarks since the week of March 10, when rising concern about the supply glut undermined big bets on an oil rally.
Many analysts suggest that OPEC should continue reduction in production for another six months. On Friday an OPEC and non-OPEC member technical committee recommended extending cuts of almost 1.8 million barrels per day (bpd) to be formally approved at the upcoming 25th May meeting.
While it is not clear that Russia would support an extension, it is also feared that OPEC-led by Saudi Arabia may leave the cartel vulnerable. The logic is simple, why should it support the US oil producers?
Reportedly, US drillers added oil rigs for a 14th week in a row, extending an 11-month recovery that is expected to boost US shale production in May in the biggest monthly increase in more than two years. Drillers added five oil rigs in the week to ending 21st April, taking the total count up to 688, the most since April 2015. That is more than double the same week a year ago when there were only 343 active oil rigs.
Analysts projected that US energy firms would boost spending on drilling and pump more oil and natural gas from shale fields in coming years with energy prices expected to climb. After taking a hit last year when dozens of US shale producers filed for bankruptcy, private equity funds raised $19.8 billion for energy ventures in the first quarter - nearly three times the total as compared to the same period last year.
A US financial services firm said in a note this week that its capital expenditure tracking showed 57 exploration and production (E&P) companies planned to increase spending by an average of 50 percent in 2017 over 2016. The expected spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015.
I am forced to arrive at a conclusion that those at the helm of affairs of OPEC are not sincere with their own countries but facilitating the US to attain the status of largest oil producing and exporting country, please correct me if I am wrong.